Market may extend last three days gains on firm Asian stocks

The market may extend last three days gains on firm Asian stocks as reports of Greek aid plan reassure on global economy. Most Asian stocks rose on Wednesday after European officials said they may help Greece grapple with its budget deficit, easing concern a sovereign default will cripple a global economic recovery.

The key benchmark indices in China, Indonesia, Japan, South Korea, and Taiwan rose by between 0.04% to 1.53%. But the key benchmark indices in Singapore and Hong Kong fell by between 0.11% to 0.54%.

US stocks staged a powerful surge on Tuesday, 9 February 2010 on optimism that help was on the way for Greece to deal with its heavy debt burden. The greenback's pullback as the euro rallied amid speculation of Greece bailout also supported equities.The Dow Jones Industrial Average added 150.25 points, or 1.5%, to 10,058.64. The broader Standard & Poor's 500 Index gained 13.78 points, or 1.3, to 1,070.52, the Nasdaq Composite Index gained 24.82 points, or 1.2%, to 2,150.87.

German Finance Minister Wolfgang Schaeuble plans to brief lawmakers today on steps he may take to support the Greek government before the European Union holds a summit tomorrow. Olli Rehn, who takes over as European economic affairs commissioner tomorrow, said Greece has to “do the necessary measures” in exchange for the European Union's support.

Closer home, the government said on Monday India's economy would grow 7.2 % this fiscal year, picking up from a six-year low the previous year and underlining expectations that the Reserve Bank will raise rates in coming months. It also backed the market view that the government could announce steps to unwind its stimulus measures in the annual 2010/11 budget presentation on 26 February 2010 as a recovery in Asia's third-biggest economy shows a more solid footing. The Central Statistical Organisation forecast said it expected the economy in the year to the end of March to expand 7.2 %. It said manufacturing, a key growth driver, would grow 8.9 %, a sharp pick up from 2.4 % in the previous year.

Farm output would contract 0.2 % after the worst monsoon in 37 years, swinging from year-earlier growth of 1.6 %. Still, the latest forecast is higher than a 2 % contraction forecast by the prime minister's economic advisory commission in October 2009. Food prices were growing at an annual rate of more than 17 % in the second half of January but had been closer to 20 %.

Last month, the RBI revised up its growth estimate for 2009/10 to 7.5 % from 6.5 % and lifted its forecast for wholesale price inflation to 8.5 % from 6.5 %.Indian policymakers, including the Prime Minister Manmohan Singh, have said they expect the economy to grow around 7.5 % in the 2009/10 fiscal year. Earlier this moth, the International Monetary Fund forecast growth in 2009/10 of 6.75 %.

The Reserve Bank of India (RBI) has already raised bank reserve requirements as it starts to withdraw its crisis measures and it has warned of mounting inflation pressures, setting the stage for rates to rise.

A day after commerce and industry minister Anand Sharma hinted at partial withdrawal of stimulus packages, the Prime Minister's economic advisory council (PMEAC) chairman, C Rangarajan, said on Tuesday the process of fiscal consolidation must start with the Budget.

Industrial output data for the month of December 2009 which is due in coming days is expected to rise 12 % in December 2009 from a year earlier. A robust figure, ahead of the 26 February 2010 annual budget, would also allow the federal government, fighting a 16-year high fiscal deficit, to cut the deficit by phasing out fiscal stimulus. A strong rise would also help the central bank to focus better on containing inflation by raising interest rates in coming months. The industrial output rose 11.7% in November 2009.

Exports are reportedly likely to grow for the third consecutive month in January 2010, as per estimates of the commerce department, making the case for a possible withdrawal of the stimulus package for sectors that were doing well. The finance and commerce ministers are scheduled to meet later in the week to take a decision on the continuation of the stimulus package for exporters, commerce secretary Rahul Khullar has said. Exports grew 13% in January 2010 over a year ago he said.

Inflation numbers in the week ended 30 January 2010 will be out on Thursday 11 February 2010. Accelerating food inflation, largely because of a poor harvest and rising global commodity prices, has become a major concern for the government. Stock markets remains shut on Friday 12 February 2010 on account of Mahashivratri.

The key benchmark indices logged decent gains in what was a choppy trading session on Tuesday, 9 February 2010. After suffering an initial setback, the market staged a comeback as Asian stocks and US index futures rose. The BSE 30-share Sensex rose 106.57 points or 0.67% to 16,042.18 on that day.

As per provisional figures on NSE, foreign funds sold shares worth Rs 525.27 crore and domestic funds bought shares worth Rs 399.25 crore on Tuesday.